GanjSmokr:nyseattitude: More compelling evidence we need more tax cuts for the wealthy?

That's just stupid. More spending is the only way out.

/what would be ideal (and actually make sense) is more taxes and less spending but that would require compromise from both sides and that isn't going to happen anytime soon.

The problem there is that cutting government spending during a recession or a weak recovery will tend to prolong the recession. Businesses aren't spending, but unless money starts moving from place to place, the economy is stagnant. If we could ask all the businesses to "pretty please start hiring people so that they have money to spend," then the government would not have to. Unfortunately, it's in each company's best interest to delay hiring until the public is spending, so nobody is willing to take the first step.

FloydA:GanjSmokr: nyseattitude: More compelling evidence we need more tax cuts for the wealthy?

That's just stupid. More spending is the only way out.

/what would be ideal (and actually make sense) is more taxes and less spending but that would require compromise from both sides and that isn't going to happen anytime soon.

The problem there is that cutting government spending during a recession or a weak recovery will tend to prolong the recession. Businesses aren't spending, but unless money starts moving from place to place, the economy is stagnant. If we could ask all the businesses to "pretty please start hiring people so that they have money to spend," then the government would not have to. Unfortunately, it's in each company's best interest to delay hiring until the public is spending, so nobody is willing to take the first step.

Government spending is not ideal, but the real world seldom is.

I should replace "less spending" with "smarter spending". If we spent "smarter" we'd end up spending "less" and get better results for our money.

Well Government debt isn't like debt that we have. It's not like they take a loan from a bank. The majority is purchased by entities in the form of Treasury bonds. These are fairly safe investments (The US has never defaulted on a bond) which yield a decent, though smaller, interest rate. People invest in the US for the same reason I might buy IBM or Microsoft shares. They are both companies that are good, safe, long term bets. One quarter of the "debt" of 16 trillion is actually fake money.. Borrowed from the Government itself in some vague IOU that may or may not have to be paid back at some time. Another quarter of the debt is foreign organizations .. everyone from Brazil to probably Zimbabwe own US Bonds. The other 50% is owned by institutional investors for 401k mixing and the general American public (retirement accounts, etc). I believe the US will paid out $400 billion in interest payments (dividends) for current bonds for FY 2012. The general interest rates are from .5-1% or so. In perspective we paid around $300 million in interest for FY 1990.

As the population grows globally it would make sense that more people are buying US bonds. The cash in time is a fixed time .. a year for example, 10 years, etc. Because of this it's highly predictable. This means there can't be a panic moment where everyone says they want their money right now. That can't happen. It's a very well managed ponzi scheme.

Basically the debt is not a big deal.. It's not doom and gloom. It's just capitalism in a free market and there are non-voting share holders that own a piece of the US Government same as I own a piece of IBM.

It wouldn't be really close at all. We had $3.5 trillion in expenditures last year against $2.3 trillion in revenues. The "Bush" tax cuts -- which have been approved by both parties, repeatedly, even when each party had significant majorities in both houses of Congress and control of the Presidency -- only cost a couple hundred billion a year. Even if you did eliminate them, you're still looking at hundreds of billions in additional cuts to get things even close.

If you really want to balance the budget, you're going to have to pair up a significant tax increase (preferably one which does away with all the stupid deductions and tax shelters) combined with significant cuts in spending on defense, medicare, medicaid, and social security.

Arkanaut:As of June 2012, Germany holds $65 Billion in US debt.Source If they're so "concerned" they should feel free to sell.

The Muthaship: We must spend our way out of debt. It's the only way.

Debt is not our primary problem (not the national debt, anyway). We need to right the economic ship, and debt is a tool to fix our problems, especially when we're borrowing at historically low rates.

I'll tend to mostly agree, but debt is likely going to be a huge problem moving into the future. The faster we address the problem, the more we can do about it.

Regarding your point about righting the economic ship, I think that what we are seeing is that the general public is finally starting to realize that this lifestyle built on credit and debt is not all unicorns and rainbows. For the first time in a long time, we are finally starting to deleverage our huge accumulation of household debt. We are also saving a little more. This is a huge step in the right direction and until this process stops, consumer spending is going to continue to be weak. I'll argue that it is not necessarily a bad thing. In fact, I kind of like the slow growth we are seeing. It will seem to indicate that maybe we are not just climbing back into another economic bubble.

In order to get anywhere with debt reduction, we first need to succeed with derp reduction in Washington - and I am looking at BOTH of you, Derpocrates and Retardicans. Instead of calling each other Nazis and worrying about taking In God We Trust off money or who supports gay marriage, abortion, religion... HOW ABOUT WE WORRY ABOUT GETTING SPENDING UNDER CONTROL YOU 'TARDS!!!

meanmutton:We've had what, $5 1/2, $6 trillion in deficit spending in the last four years? That's a lot of pump-priming without a lot of results.

1) Only about $1 trillion of that was extra spending to fix the economy, and according to some analyses, the damage done to the economy was around $1.8 trillion. So there's still a gap to make up.

2) The biggest contribution to the deficit is the collapse in the revenue stream due to mass unemployment -- fewer people working means less taxable income, and more people collecting unemployment insurance.

3) You can't honestly look at the rate at which the economy was collapsing at the end of 2008, compare that with the economy today, and say there weren't "a lot of results".

The problem with borrowing at historically low rates is that you do have to pay it back -- and while you're doing it, the balance you've carried over is no longer at those historically low rates.

You mean like all the other times that we had to pay back the borrowing? Oh wait, the only time we paid it off was 175 years ago. We didn't do it by defaulting, we just roll it over because US Treasuries are one of the backbones of the international economy -- even if the yuan or the euro (ha!) or some "basket of currencies" replaces it, people will still buy it, because it's the biggest game in town.

Frankly, if we start to see the interest rate rise independently of any extraordinary Fed action, that would be a good sign, because it means that investors now see more signs of growth in private businesses, and thus are liquidating their bonds to invest in riskier instruments. That would be a good time to start "retrenching", because then the marketplace should be strong enough to stand on its own without support from the federal government.

You are wrong here in a roundabout way. You are correct that the debt itself is really not the issue, but the interest obligation on that debt is a huge deal. Specifically, the debt never really has to be repaid and can simply be rolled over, however, the interest obligation is something that the goverment must pay before it can spend a dime on any other spending obligation. Right now, the interest on the Extended National Debt eats up about 18% to 20% of the entire Federal Tax Revenue. That leaves the government with less money to pay for its other items. The bottom line is that it increases our deficits and itself lends to the debt. There is a point where the debt itself through the interest obligation can be one of the biggest single drivers of deficts. Take a look at the CBO Alternative Fiscal Scenario.

Since the quality of the US debt is directly tied into the fiscal heath of this country, more debt is a drag on our ability to issue more debt at these cheap interest rates. In fact there is another news story about Moody's looking at taking our credit rating down another notch. This trend will continue until we get our fiscal house in order.

Arkanaut:Frankly, if we start to see the interest rate rise independently of any extraordinary Fed action, that would be a good sign, because it means that investors now see more signs of growth in private businesses, and thus are liquidating their bonds to invest in riskier instruments. That would be a good time to start "retrenching", because then the marketplace should be strong enough to stand on its own without support from the federal government.

Maybe, maybe not. It could also be a sign of downgraded credit or an unwillingness of folks to buy our debt. And don't forget that any interest rate rise will make the interest oblgation of the federal government all that much more expensive.

Lunchlady:Interest rates are lower than inflation. We should be borrowing and spending our way out of the recession.

That is like saying that we should be maxing out every credit card that we can find that has a 0% introductory offer and use it to help with that rainy day. Don't think for a second that these interest rates are going to stay low forever. You will evenutally have to pay the piper.

This type of short-sighted thinking is exactly the crap that we need to stay away from.

HeadLever:Lunchlady: Interest rates are lower than inflation. We should be borrowing and spending our way out of the recession.

That is like saying that we should be maxing out every credit card that we can find that has a 0% introductory offer and use it to help with that rainy day. Don't think for a second that these interest rates are going to stay low forever. You will evenutally have to pay the piper.

This type of short-sighted thinking is exactly the crap that we need to stay away from.

I'm pretty sure the United States isn't taking any variable rate loans.

Not only that, but the United States issues the currency the loans are written for, we can inflate our way out of a debt crisis. We shouldn't, but we could.

I'm not arguing these are good things, but they aren't the end of the world. I'd argue we increase taxes but successive 1% amounts per bracket, increase the maximum social security deduction, and chop off 10% from defense spending but I also live in the real world.

Lunchlady:I'm pretty sure the United States isn't taking any variable rate loans.

Technially correct. However, all debt that the goverment issues is NEVER repaid. It is rolled over into new debt and the interest rate re-sets to current value. In this way, it is basically a interest only loan that adjusts everytime the note is due.

we can inflate our way out of a debt crisis.

Umm, probably not Dont forget that this was the thinking of both the Weinmar Republics and the Zimbabweans spiral into the dust bin of history.

Lunchlady:I'm not arguing these are good things, but they aren't the end of the world. I'd argue we increase taxes but successive 1% amounts per bracket, increase the maximum social security deduction, and chop off 10% from defense spending but I also live in the real world.

I'll agree that these are not bad things, but I think that you realy underestimate the magnitude of the problem. Raising taxes on everyone by 1% will likely bring in about $150 Billion per year in additional revenue. Cutting Defense by 10% saves about $80 Billion per year. Assuming you fix to SS shores up the program by providing an additional 50B to the Government coffers. If we assume no adverse impacts due to higher taxes and unemployed DoD workers you have only cut the deficit by 1/3 or so.

HeadLever:Lunchlady: I'm not arguing these are good things, but they aren't the end of the world. I'd argue we increase taxes but successive 1% amounts per bracket, increase the maximum social security deduction, and chop off 10% from defense spending but I also live in the real world.

I'll agree that these are not bad things, but I think that you realy underestimate the magnitude of the problem. Raising taxes on everyone by 1% will likely bring in about $150 Billion per year in additional revenue. Cutting Defense by 10% saves about $80 Billion per year. Assuming you fix to SS shores up the program by providing an additional 50B to the Government coffers. If we assume no adverse impacts due to higher taxes and unemployed DoD workers you have only cut the deficit by 1/3 or so.

In essence, what you outlined would be a good start.

What I meant by successive 1% was 1% per bracket Meaning increase the bottom bracket by 1%, next bracket up by 2%, and so on. Keep the increases proportional and progressive, no need to get cute. That's after allowing the Bush tax cuts to expire. I'd also want to wait and see what tax revenues look like after we clear the lingering effects of the recession.

Lunchlady:What I meant by successive 1% was 1% per bracket Meaning increase the bottom bracket by 1%, next bracket up by 2%, and so on. Keep the increases proportional and progressive, no need to get cute. That's after allowing the Bush tax cuts to expire. I'd also want to wait and see what tax revenues look like after we clear the lingering effects of the recession.

Ah, gotcha. Missed that part.

Not that I am aginst some targeted tax increases as we definaly need the revenue, but be aware that there is likely an upper limit on this. Refer to Hauser's Law for more information. Right now spending is about 23.5% of GDP. Assuming we can get revenues up to the upper limit of the historical levels (say 19%) and assuming that spending stays about the same, that still leaves a deficit of nealy $700 Billion. As you can see, this is too big of a problem to just to hit from one side of the ledger. We need to get a handle on both revenue and spending.

HeadLever:Right now, the interest on the Extended National Debt eats up about 18% to 20%

Closer to 10%.. really closer to 11%: $400 billion on 3.8 trillion. To put this in perspective in 1990 we spent about 17-18% servicing interest: $200 billion on 1.3 trillion. It's come down significantly in 20 years not gone up.. This why to me it's a non-topic. Just like when people say "Most spendiest president in history!!1 warrrrbbbllll" because yes the DOLLAR amount is higher but the percentage is lower.

arobb00:In order to get anywhere with debt reduction, we first need to succeed with derp reduction in Washington - and I am looking at BOTH of you, Derpocrates and Retardicans. Instead of calling each other Nazis and worrying about taking In God We Trust off money or who supports gay marriage, abortion, religion... HOW ABOUT WE WORRY ABOUT GETTING SPENDING UNDER CONTROL YOU 'TARDS!!!

Which would be true if we didn't control the primary reason why that graph looks so silly. Interest rates.. The government owns them and it can serve whatever purpose they want it to serve. To think that by 2080 that's all we're going to be spending on SS and Medicare is just silly.. also no growth in defense? Which 5 year old did you pick to make that graph?

? the main driver of that yellow line is not interest rates, but the acculumulation of debt, which is affected by the interest obligation? See the pattern yet?

And while there are things that we can do to help direct the interest rates, we don't totally control them. They are set ultimately by demands and the market place.

To think that by 2080 that's all we're going to be spending on SS and Medicare is just silly.. also no growth in defense? Which 5 year old did you pick to make that graph?

Do you anticipate us getting rid of all old people in the next 70 years? Think we are going to dig up some Morlocks soon? Also, if you look at the graph, you will see that the Y-axis is in % GDP, not dollars. If you want to chastise the folks that made that graph, send your BRF to the good folks at the GAO and CBO (warning pdf, see page xi)

For some reason, sensible fiscal reform ALWAYS winds up falling on the shoulders of the very poorest and those who most need support. Your grandmother, the single mom down the street, school districts. It never, ever means military cutbacks, increased tax revenues, reform of energy and farm subsidies.

You farking idiots who buy into the austerity bullshiat....don't you realize the RNC and the people pulling their strings want to completely do away with the meager American social safety net?

MyRandomName:nyseattitude: More compelling evidence we need more tax cuts for the wealthy?

The rich are paying the highest % odds income tax in modern history. Spending is at the highest point since www2 maybe it's time to rethink your cunning plan of spend more tax only the rich, no?

Where do you think all the income gains in the last 4 decades have gone Sherlock. In spite of the fact that not only are the top earners paying the lowest income tax rate they've paid in 80+ years, they're also managing to pay the highest dollar percentage into government revenues....

THEY HAVE ALL THE farkING MEANINGFUL INCOME

Cut their taxes again? FARK NO!!! Raise the top marginal rate to 90% again,,,,and build some god damned schools, roads, bridges and a new electrical grid. Those fark sticks can suck my anus

HeadLever:Lunchlady: I'm pretty sure the United States isn't taking any variable rate loans.

Technially correct. However, all debt that the goverment issues is NEVER repaid. It is rolled over into new debt and the interest rate re-sets to current value. In this way, it is basically a interest only loan that adjusts everytime the note is due.

we can inflate our way out of a debt crisis.

Umm, probably not Dont forget that this was the thinking of both the Weinmar Republics and the Zimbabweans spiral into the dust bin of history.

Well, those payments pegged to inflation are pegged to the CPI and not actual inflation. They can and do cherry pick what goes into the CPI estimates to create estimate they want. I don't know what they are using to come up with a CPI of 1.4 for the last 12 months, but is sure as hell doesn't include some of our biggest out of pocket expenses - gas and food.

Technially correct. However, all debt that the goverment issues is NEVER repaid. It is rolled over into new debt and the interest rate re-sets to current value. In this way, it is basically a interest only loan that adjusts everytime the note is due.

we can inflate our way out of a debt crisis.

Umm, probably not Dont forget that this was the thinking of both the Weinmar Republics and the Zimbabweans spiral into the dust bin of history.

Well, those payments pegged to inflation are pegged to the CPI and not actual inflation. They can and do cherry pick what goes into the CPI estimates to create estimate they want. I don't know what they are using to come up with a CPI of 1.4 for the last 12 months, but is sure as hell doesn't include some of our biggest out of pocket expenses - gas and food.

it does include gas and food. gasoline prices are down 5% from last year, nationwide. natural gas prices are down by more than twice that.

X-boxershorts:Cut their taxes again? FARK NO!!! Raise the top marginal rate to 90% again,,,,and build some god damned schools, roads, bridges and a new electrical grid. Those fark sticks can suck my anus

They would love if you actually did that with their taxes and pay them with a smile.

Unfortunately, you like using the money for which they had to work to bribe the elderly, public sector unions, and the lazy and irresponsible to keep you in power to keep the free stuff from government train running.

X-boxershorts:You farking idiots who buy into the austerity bullshiat....

Austerity is not necessarily the same as doing away with social saftey nets. In fact, you can cut spending by quite a bit and leave the safety net alone. If you think that the only ones that suggest we pull back on the spending reigns are those same folks that want to 'kill the poor' or some other retarded talkking point you have the partisan blinders on.

X-boxershorts:Cut their taxes again? FARK NO!!! Raise the top marginal rate to 90% again,,,,and build some god damned schools, roads, bridges and a new electrical grid. Those fark sticks can suck my anus

U Mad?

Seriously, quit with the devisive BS, It is time we suck it up and fight for getting our fiscal house in order. That is going to take serious will power from both sides. Making it an 'us vs them' issue only drives the sides further away from every making this happen.

Meager? You mean the $815 billion we spend in Medicare/medicaid? Or how about the $750 billion we spend in Social Security? Maybe the $370 Billion we spend on other Income Security programs?

Add that up and that is about 2 Trillion per year we spend on this 'meager' saftey net. That is about 12.6% of the GDP. Per capita, that cost is about $6200 per citizen and about $17,000 per person that files income taxes.

Add in what we pay each year in interest on the extended federal debt and you have effectly used up all federal goverment tax revenue.

I personally like the idea of having a saftey net for those that really need it. However, we need to balance it with what we can afford in the long term

Hauser's Law is not a law. You can look at pretty much any other country in the Western world, because they all manage to collect over 20% GDP of taxes. This is an extreme example, but some of the Scandinavian countries collect almost 50% of the GDP in taxes. We could do it too, if we really wanted.

The problem with Hauser's "Law" is that it only looks at one independent variable, the tax rate. Especially in a tax system as complex as ours, there are many, many other variables, deductions, credits, loopholes, whatever you want to call them, that effect the tax rate and give us what Hauser observed: An effective tax rate as percentage of GDP around 20%.

This is probably one of the sneakiest examples of correlation does not equal causation. It looks very legitimate on the surface, but after you dig through a couple of layers it's spurious to the bone.

HeadLever:Add that up and that is about 2 Trillion per year we spend on this 'meager' safety net.

As a percentage of GDP, it's still less than what the rest of the developed world does. If our healthcare system wasn't straight up terrible, we could expand the safety net and save money with ease.

If our healthcare system was as efficient as the Netherlands (next most expensive in the West), we could probably save 3% or 4% of GDP right there, and also have a system that covered everybody, so private expense on healthcare would also be much lower.

This would, of course, require us to adopt something even more SOSHULIZT! than the PPACA. The most realistic option would probably be a Medicare For All public option. Even if Obama wins, the Democrats hold both chambers, and the filibuster rule is done away with, I still doubt we'd see such a policy push, despite it killing three birds with one stone.